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Mergers of social services and education departments have already been proposed

Local councils in Wales could face a big shake-up under a major review into the way public services are run.

The Welsh government has ruled out any large reorganisation before the next assembly election.

But a review is seen as an attempt to reach an agreement on cutting some of the 22 Welsh councils after 2016.

First Minister Carwyn Jones said he would reveal the remit of the commission to the Welsh assembly "in due course".

He made the low-key announcement in a written statement.

The Commission on Public Service Governance and Delivery will be chaired by former Welsh NHS chief executive Sir Paul Williams and include representatives of the main political parties and local government.

In his statement, the first minister said: "Since public sector budgets are likely to continue to tighten, and demand pressures grow, there is a clear need to examine how services can be sustained and standards of performance raised, so that people in Wales can continue to receive and influence the public services they need and value.

"And as we can see from the impact of the current financial decisions by the UK government, a healthy public sector is essential to a healthy economy.

Analysis

By Vaughan RoderickBBC Welsh Affairs Editor

It is only two decades since the current 22 local councils were established - and the Welsh government has ruled out any major reorganisation in this assembly term.

But the low-key announcement of the new commission is seen by many in local government as heralding a change of heart.

In recent months some of local government's most senior figures have urged the government to bite the bullet and draw up plans to radically reduce the number of councils.

While the exact remit of the new commission has yet to be announced, it is being seen as an attempt to reach a consensus in favour of major changes in the way Wales is run.

"The establishment of this Commission on Public Service Governance and Delivery provides an opportunity for those who are involved in delivering services, those who are politically accountable for them and users of them to examine how public services are governed: that is, held accountable for their performance and delivered most effectively to the public.

"I will make a further statement to the Assembly on the remit of the commission in due course."

In recent months senior local government figures have urged ministers to draw up plans to merge local authorities, nearly two decades after the restructuring which created the current 22 authorities in 1996.

In March Gwynedd council leader Dyfed Edwards said hundreds of millions of pounds could be saved if the existing six north Wales local authorities were replaced by just two.

Mr Edwards said one council for the north east and another for north west Wales could address a "significant financial challenge".

Local government consultant and former Bridgend council leader Jeff Jones told BBC Radio Wales he backed fewer councils.

"A huge mistake was made in the 1990s because the UK parliament was dominated by MPs who weren't interested in local government, they were more interested in how the reorganisation played with their political members," he said.

'They've struggled'

"As a result we ended up with 22 local authorities.

"In the original Bill, you had Merthyr and Blaenau Gwent joined together. What happened in the end in the Act, because Labour was given one extra authority, they were split.

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Media captionMike Hedges and Jeff Jones discuss council reorganisation on BBC Radio Wales

"With the best will in the world, they've struggled since then."

Elsewhere, Cardiff council cabinet member and former leader Russell Goodway has told the Western Mail the number of councils in Wales should be cut to just seven.

But not everybody is in favour.

Mike Hedges, former Swansea council leader turned assembly member for Swansea East, said: "When we had the last local government reorganisation we had three major services - education, fire and social services - which were probably too big a service to be provided by smaller councils.

"With fire, they created a joint board. I think they should've done exactly the same for education and social services.

"For the rest of the services, the size is probably about right.

"Can I just remind people that before the last reorganisation, we had over 30 district councils in Wales as well as the eight county councils."

Local councils have already been urged to co-operate more closely to improve performance, by sharing resources and in some cases merging key departments.

Rhondda Cynon Taf has been asked to consider merging its education service with that of neighbouring Merthyr Tydfil, which was stripped of its responsibility for schools following a critical report by inspectors from Estyn.

But Caerphilly councillors have rejected plans to merge its social services department with that of Blaenau Gwent amid concerns about the "significant risk" posed by taking on the latter's £1m deficit.